Microsoft says the fine announced in February is too high. It should be annulled, and if not, they ask that it be reduced. Oh, and it would like the EU Commission to pay costs. Yes, the EU Commission is the defendant. It seems it neglected to believe Microsoft's experts about how valuable its patents are. And it accuses the Commission of accepting reports from the trustee, whom Microsoft hand-picked, by the way, based on "documents obtained through powers of investigation that the Court of First Instance held to be unlawful." Whoah. No more Mr. Nice Guy for Microsoft, I see.

Note that this is news to us, but not to the EU Commission, as this action was brought May 9th. So. Here we go again.

Sean's description of it made me smile:

It's a blast from the past: "We want clarity", "our licenses were not
expensive and everyone who wanted a license negotiated one", "nobody
listened to our paid experts", "the Commission's trustee got
incriminating documents illegally", "due process was not followed",
"the fine is too heavy, since there was only a little partial problem
with the licenses".

Note that the period in question is for the daily fines covering the
period between June 21, 2006, and October 21, 2007, when Ballmer and
Commissioner Kroes made their deal.
This is really a followup to Neelie Kroes' press conference in
February.

Of course, as they require that I tell you regarding the document, and I would have anyway, "Only European
Union legislation printed in the paper edition of the Official Journal
of the European Union is deemed authentic." So as always, go by the PDF for anything that matters, but the text version is helpful for those who rely on screen readers and for searching.

annul the Decision of the European Commission C(2008) 764 final of 27 February 2008 fixing the definitive amount of the periodic penalty payment imposed on Microsoft Corporation by Commission Decision C(2005) 4420 final;

in the alternative, annul or reduce the amount of the periodic penalty payment imposed;

order the defendant to bear the costs.

C 171/41 EN Official Journal of the European Union 5.7.2008

Pleas in law and main arguments

By a decision of 10 November 2005 adopted pursuant to Article 24(1) of Regulation 1/2003 (1) the Commission imposed a periodic penalty payment on the applicant for failure to comply with the obligation to make the technical documentation embodying the Interoperability Information available to interested under takings on reasonable and non-discriminatory terms pursuant to Article 5(a) of Commission Decision 2007/53/EC of 24 March 2004 (2). The contested decision fixed the definitive amount of the periodic penalty payment for the period between 21 June 2006 and 21 October 2007 inclusive at EUR 899 million. The applicant seeks the annulment of the contested decision on the following grounds:

The Commission erred by subjecting Microsoft to periodic penalty payments to force it to apply ‘reasonable’ price terms without first specifying what price terms would, in the Commission's view, be ‘reasonable’ so as to allow Microsoft to know what to do to avoid the imposition of such penalty payment.

The Commission committed a manifest error of assessment and violated Article 253 EC by concluding that published rates adopted by Microsoft were unreasonable and contrary to the 2004 decision without taking account of the facts that (i) these published rates were expressly intended to facilitate negotiations between Microsoft and prospective licensees and (ii) Microsoft had, in consultation with the Commission, created a mechanism whereby the trustee would review the rates proposed by Microsoft if any prospective licensee failed to reach agreement which was virtually identical to the mechanism created by the Commission itself in NDC Health/IMS Health: Interim Measures (‘IMS Health’) (3). The Commission also committed a manifest error of assessment by (i) failing to give due weight to the fact that these published rates were set by Microsoft at a figure lower than the rates that a third party expert determined to be reasonable (ii) failing to give due weight to the fact that no prospective licensee failed to reach agreement with Microsoft and (iii) failing to consider the fact that licensees of the ‘no patent’ licence also obtain rights to use Microsoft's patents.

The Commission committed a manifest error of assessment by requiring Microsoft to establish that its trade secrets were innovative under a heightened patentability test in order to justify the imposition of royalties for a licence to such trade secrets. The Commission also violated Article 253 EC by failing to take account of numerous arguments raised by Microsoft on the basis of reports prepared by patent experts which criticised the Commission's approach.

The Commission violated Article 233 EC by failing to take the necessary measures to comply with the judgment in Case T-201/04 (4) in so far as the Commission based its assessment reports prepared by the trustee on the basis of documents obtained through powers of investigation that the Court of First Instance held to be unlawful.

The Commission denied Microsoft's right to be heard by failing to give Microsoft an opportunity to make known its views after the end of the reference period for which Microsoft is fined, there by preventing Microsoft from commenting on all relevant aspects of the case.

The amount of the periodic penalty payment is excessive and disproportionate. Among other reasons, the Commission failed to take due account of the fact that the contested decision only concludes that the royalties allegedly established by Microsoft under one particular licence (the ‘no patent’ licence) were unreasonable, and therefore doesn't challenge (i) the royalties allegedly established by Microsoft for all of its intellectual property rights incorporated in the entirety of the Interoperability Information that Microsoft is required to disclose under Article 5 of the 2004 decision or (ii) the completeness and accuracy of the Interoperability Information.

(1) Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (Text with EEA relevance) (OJ 2003 L 1, p. 1).